Assume the following facts relating to a lease:
• Leased asset, new at the inception of the lease term.
• Estimated useful life, 14 years.
• Lease term, 8 years; asset returns to lessor.
• Interest rate implicit in the lease, 10% (known by lessee).
• Lessee's marginal borrowing rate, is 12%.
• Amount of each lease payment, $2,000.
• Lessor's cost of the leased asset, $15,164.
• Market value of the leased asset at the inception of the lease term, $15,164
• Lease payments are due at the end of each period.
From the perspective of the lessee using ASPE, this lease should be classified as a:
Question 3Select one:
a.
direct financing lease.
b.
sales-type lease.
c.
operating lease.
d.
finance lease.